Fannie Mae and Freddie Mac offering 3% down payment option for first time home buyers
Posted: Dec 12, 2014 12:34 AM CDT | Updated: Jul 28, 2016 5:26 PM CDT
\"The one obstacle first-time home buyers have had is the down payment.,\" said John Inzeo, President-Elect of the Wisconsin Mortgage Bankers Association.
Fannie Mae and Freddie Mac announced this week it will offer a 3% down payment option to first time buyers and other qualified borrowers.
\"I think what it does is that it opens up a broader horizon,\" said Inzeo, \"we're not sure yet, until we get there how many consumers can be serviced with these new loans.\"
Lenders say potential buyers must go through a pre-purchase counseling program, income verification, and have a good credit history.
\"You've demonstrated that making your obligations and paying your bills is important,\" said Beth Jaworski, Associate Vice President of Shorewest Realtors, \"and the odds are you're going to treat your mortgage the same way.\"
Some economists believe the program sounds too good to be true. Some banks, like Bank of America worry borrowers will default on their loan, but local realtors and lenders say based on their experience with other similar programs-- they don't see a problem.
\"We've actually had local lenders that have been offering a conventional 3% down program for the last few years for first time buyers who had a high credit score, and had not have a problem,\" said Jaworski.
\"I think there's enough risk management built into these programs, that we don't have to worry about things that happened in the past,\" said Inzeo.
The option will become available in the next few months. There are still many unanswered questions about interest rates. Experts emphasize it's important to sit down with a qualified lender before deciding to move forward.